A 5% inflation rate each year means that a dollar will lose over half its value in three years.

Name: A 5% inflation rate each year means that a dollar will lose over half its value in three years.
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Question

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A 5% inflation rate each year means the value of a dollar decreases, but it would not lose over half its value in just three years. The cumulative effect of a 5% annual inflation over three years would reduce the dollar's value, but not by more than 50%.

A 5% Inflation Rate Each Year Means That a Dollar